China and the World of Business • China Business and the World

Tag: Public relations

In response to my article “Standards of Influence,” an old friend and fellow China PR executive raised his hand to offer a gentle objection. While agreeing with the premise, he suggested that if commercial interest disclose their efforts, won’t the public sector put up resistance to their input, as it would be seen as bowing to foreign interests. He further suggested that there might be circumstances when it would be best to allow such processes to take place behind close doors.

This is a fair point, and needs to be addressed.

The combination of popular sentiment, social media watchdogs, and the Party’s desire to short-circuit the cycle of corruption is fostering greater transparency in China around the influence that companies (especially multinationals) try to exert on political decisions. Companies caught trying to change the rules in their favor are finding their operations subject to greater official scrutiny, and officials who appear to have taken part in such discussions are being investigated (or worse) with greater regularity. The potential downsides of the process are starting to outweigh the potential benefits.

This does not mean businesses cannot or should not have a voice in public decision making. Indeed, the wise regulator seeks the open input of a wide range of stakeholders, and businesses owe it to their own stakeholders to stand up and be counted. But when that voice is cloaked, the slope to malfeasance and corruption steepens and is carpeted with bacon grease. Sunlight ensures that the role of commerce in the process serves the public good as well as the private interest.

This means that those of us who operate at the nexus between industry and government in China cannot rely on the time-tested tools of government influence. We must chart a new path that is radically transparent yet equally (if not more) effective. That is a very narrow bridge to walk, and will require a great deal of imagination even in those cases where there is a high congruence between the needs of the nation and the desires of the merchant.

Yet it is critical for us to do so – and not only in China. Around the world there is a growing distaste for (and pushback against) the role that commercial interests play in the formulation of policy. Indeed, China has a deep ideological bias against such interactions. To continue to act as if these sentiments are irrelevant is aught more than denial.

Certainly, there will always be situations where it is better for all – including the public at large – for government discussions with industry to take place behind closed doors. But we should take for granted that in most cases, secrecy does not serve the public, and companies should thus shy from such approaches. If the mounting social and environmental costs of China’s development offer proof of nothing else, it is for the virtue of public scrutiny.

For a company to have real influence in policy in the future, it must first carry the burden of proof that the policies it is advocating are in the service of the public interest. Public relations people should encourage this: not only does this eliminate for companies the risk of later disclosure and the implication of impropriety, it also serves as prima facie proof of good corporate citizenship.

I have said this in other fora, and as my book Public Relations in China goes to bookstores I am getting questions from media and others that have caused me to lay out the following disclaimer:

I am not a “China expert.”

There is no such thing as a “China expert.”

Anyone who comes to you claiming to be a “China expert” is either deluded (and thus to be pitied), lying (and thus suspect), or out to separate you from your money (and thus to be avoided.)

You don’t have to believe me. Dr. Fan Gang, the head of China’s National Economic Research Institute and the Secretary-General of the China Reform Foundation (among many other titles), once said as much to a reporter when she asked Dr. Fan and I whether, “as China experts,” we saw China’s economy improving or in decline in coming years. He denied being a China expert, told the reporter that he knew I agreed, and questioned the very existence of anyone who could claim the title of a China experts.

China is too large, too old, and too complex to be sufficiently understood by a single individual. At the very most, we can be “specialists.” We can never be “experts.”

When doing business in China, you thus cannot rely on the counsel of a single individual, regardless of how experienced, well-connected or erudite. Instead, seek and genuinely consider the advice of a range of people of different backgrounds, and in so doing form your own view based on a synthesis of their views.

Public relations people have a word fetish. We invest the aphorism “words have meaning” with an almost scriptural infallibility. Yet when it comes to terms we use to describe our own capabilities, we become maddeningly imprecise, if not deceptively hyperbolic. The best (or perhaps worst) example of that is the word “strategic,” as in “strategic public relations.” In fact, we use it so much when referring to so many different things that the phrase has almost lost its meaning.

In a new paper published last month by Allison+Partners (“Strategic Public Relations in China: Actions, Behavior and Communications”,) I ask the PR industry generally and in China specifically to take a step back. I argue for a definition of strategic public relations that steps completely outside of the communications function: as it was originally intended by the founders of the public relations craft, PR begins with the actions and behaviors of a company, and the obligation of PR counsel to guide them. My point: it is time for all of us to become more strategic, and in no place more so than in China, where so many brands consistently fail to understand, much less live up to, the expectations of their publics.

For my fellow PR practitioners and anyone else who oversees a PR function, the paper is available for free download and review on academia.edu. It’s a fairly quick read.

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As more details about ties between the China operations of Edelman Public Relations and erstwhile China Central Television (CCTV) anchor Rui Chenggang are released, a wave of schadenfreude has risen amongst both Edelman’s rivals and the detractors of public relations. As happened when Edelman was caught in a similar ethical imbroglio when it hired ostensibly independent bloggers to post on behalf of Wal-Mart, PR‘s detractors believe that ethical lapses suffuse China’s public relations industry, while practitioners who don’t work for Edelman see this as a large, hubris-laden market monster getting its due.

Both are wrong.

Ethical lapses are common in PR in China, but “common” is a far cry from endemic. There are PR firms, executives, and teams in China who insist on the highest possible ethical standards. Rather than going broke, they discover that while some clients will shun them for these reasons, a growing number of clients, particularly MNCs, are insisting on high ethical standards and are willing to sacrifice short-term results for a clean reputation. Clean business is good: not only do these PR firms keep very busy, they have to turn opportunities away.

But while these firms are the future of the business, they are still the exception that proves the rule, and no agency executive or corporate PR manager should guffaw too loudly at Edelman’s expense. For far too long as an industry and a craft we have turned a blind eye to practices considered unethical, immoral, or even illegal in more developed markets, failing to see that China was developing and that a reckoning was coming.

Two issues prevent widespread improvement in PR industry ethics in China. First is a persistent exclusivist belief that because this is China, things are done the Chinese way, and always will be. Operating ethically is seen as naive at best, and culturally imperialist at worst (“how dare you impose your values on us!”)

The second issue is fear. PR executives and their agencies believe that if they don’t take advantage of every opportunity, however morally ambiguous, they will lose revenue and clients to competitors who lack – or opportunistically ignore – their moral compasses. The pressure is greatest among the larger agencies where the focus is exclusively financial performance. The accountants calling the shots in New York and London are not measuring ethical compliance: they measure revenues and profits. Faced with the choice of losing a sizable client or cutting some ethical corners, there is no contest.

But the persistent idea that China is an island untouched by ethical standards for the conduct of public relations is now demonstrably so much cow manure. Those who cling to such exceptionalism – and you know who you are – are dinosaurs whose time in this business is limited, regardless of the success they appear to enjoy today.

What happened to Edelman could have happened to any of dozens of local and international PR firms. Rui had made himself a target, and Edelman is the largest PR firm in the world. But the rest of us have now been given a shot across our bows. Either we bite the bullet now, change course and adopt ethical tactics and practices, or we leave our firms, our people, and our livelihoods at the mercy of government caprice. If we don’t, this will happen again, and when it does we will all find that it will not be a single firm in the spotlight – it will be every PR practitioner in China.

There is a growing cohort of public relations firms that are opening practices focused on helping Chinese companies build better reputations among global audiences. This is a good thing: heaven knows, no group of companies is more in need of this kind of help than Chinese enterprises.

What is discouraging, however, is that many senior professionals in the PR industry continue to misdiagnose the problem. To take one example, in a pay-walled PRWeek article dated New Year’s day (“Chinese Companies Bridging the Comms Gap in U.S. Market”), a senior global agency executive and a Chinese CEO both single out transparency as the missing element for China Inc. as it ventures abroad.

“When [Chinese businesses] come to the US, they think they are being transparent when they are not because our standards are so high in terms of transparency,” Black says. “They have to be willing to open themselves up to regulatory bodies and the public. It’s been a major adjustment.”

One of the early pioneers of the PR business, Edward Bernays, counseled PR practitioners in his seminal 1928 book Propaganda that to be effective PR has to be more than just corporate spin.

“In relation to industry, the ideal of the [public relations] profession is to eliminate the waste and the friction that result when industry does things or makes things which its public does not want, or when the public does not understand what is being offered it.” (Emphasis mine.)

Simply put, public relations is first about getting the company to behave and act in accordance with public expectations, and then communicate that compliance to ensure the public gets it.

For Chinese companies, transparency is useless if all it reveals is a company engaged in unsavory or nefarious behavior. Further, for reasons both political and cultural, that behavioral bar is higher in the U.S. for Chinese enterprises than it is for U.S. companies (or companies from just about any other country). To borrow from Donald Tapscott, if a company is going to be naked, it had damned-well better be good to look at. And Chinese companies need to better looking than everyone else to merit an equal reputation.

The core challenge for public relations practitioners is not only convincing Chinese companies to be transparent, but also – and first – helping Chinese companies to understand and behave in accordance with the expectations of highly skeptical global audiences. Once that is accomplished – and only then – is it time to open up for full scrutiny and communicate that they are doing so.

Naturally, this is not as simple as it sounds, nor is it a lot of fun. The alternative is to spend a lot of time and money first creating a Potemkin reputation, and then more time and money running around plugging holes in the facade. The end result of that fire drill is an also-ran company with a middling reputation that nobody likes very much, and with whom others will do business only if they have no other choice.

The companies that clean themselves up before venturing abroad (or even while doing it) get double credit, first for being sensitive to the expectations of foreign audiences, and then for doing something about it. The payoff not only in reputation but in credibility and trust would be priceless, the need for spin would disappear, and the positive attention would make sales and marketing simple.

Despite the potential benefits, I understand why some public relations executives balk at that challenge. It is scary to face up to a client and tell him or her truths they have no interest hearing. It is outside the comfort zone of a large number of PR people. And let’s not forget: it can be much more lucrative to provide costly palliatives for a crippled reputation than it is to deliver a genuine cure.

But Chinese firms owe it to themselves and their customers to seek out only the P.R. people – both inside and outside the company – who are prepared to deliver a cure, and who don’t babble on about reputation but focus on creating genuine trust.

A lot of the talk in the public relations industry relates to how much the media business is changing, and what that means to a craft that has traditionally placed a heavy emphasis on informing and (hopefully) influencing journalists. That focus remains viable in markets like China and India, where the media – especially traditional media – retain tremendous influence. In places like America and in Europe, that influence is in decline.

One aspect of public relations that is going through a huge change, however, is what we like to call public affairs. Despite a racy name that implies exhibitionistic behavior, public affairs is the term applied to the craft of understanding the government decision process and effectively influencing policy on behalf of a company or organization.

Whether through direct lobbying or indirect communications, the idea of a company or a special interest group influencing policy does not go down well among the citizens of free and open societies. Events of the past several years have cast this process as a bit underhanded, and perhaps nefarious, and much of the reason for that is that the practice of public affairs was formed at a time where some degree of behind-the-scenes sausage-making was expected in governance. A lot of people simply didn’t want to know about the ugly process, they were interested in the result.

But in the wake of two economic downdrafts in the past decade, alleged commercial-governmental collusion on a vast scale, the failure of regulatory institutions to act in the public benefit (particularly in the US and Europe), and growing public expectations of procedural transparency (thank you, Internet), the process of governance is now a public sport. Public affairs, as practiced, has to catch up. Discretion is no longer the better part of valor: it is suspect.

Updating this practice is going to demand some radical steps and a lot of discussion. In order to start the process, I suggest we alter our approach to government relations worldwide to conform to the following guidelines:

1. Transparency to the greatest possible extent. This means standing up in public and telling the world exactly what you are telling the government, and why. The agenda must be in the clear and open to both scrutiny and debate, as should be the tactical approach the company is taking. This also means that public affairs becomes more than a matter of speaking to government officials about company input on policy: it means involving the public as well.

2. Behavior and actions that withstand public scrutiny. The public is going to find out what you are doing to influence the process. Just ask Big Tobacco, Big Oil, Enron, and the Nuclear Power industry. In addition to making clear what you intend to do, conduct yourself in the process as if an overweight socialist documentary filmmaker from Detroit was following you around with a camera. Forget chummy dinners and back-room deals. When you are influencing public policy, you are going about the public business, and you need to behave accordingly.

3. Avoid behavior for which others have received opprobrium or censure. If someone else has done it before and gotten in trouble for it, why are you taking the risk?

4. Stop playing moneyball politics. Yes, the Citizens Uniteddecision in the United States has given corporations an unprecedented opportunity to influence the political process with money, and the opportunity for money or favors to influence the process exists in nearly every market in the world. Don’t do it. Let me say that again: don’t do it. Just because something is permissible doesn’t make it right in the eyes of your publics. The more you use money to influence the process, the more liability you are building in the bank of public opinion, and in each market a reckoning will come, rest assured. Find another way that does not hang a sword over your company’s head.

5. All of this means you will have to create a new set of tactics and techniques for conducting government relations. The way to start the process is to find a way to align your interests with those of the public at large, and keep them there. This will not be easy, but we have ample examples in the history of business to prove that it is not only possible, it is the best way to do business.